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LOUISIANA CIVIL LAW OBLIGATIONS

Professor Trahan

Course Outline3 Installmentrd

5. By The Number of SubjectsRead Levasseur, Précis, 73.

a. Pure & Simple Obligationsb. Obligations with Multiple Persons

What's an obligation with multiple persons? See CC art. 1786.What's so special about these obligations? There present complications with respect to (i) performance,

(ii) prescription, (iii) default, (iv) insolvency, and (v) remission.1) Several Obligations

Read Levasseur, Précis, 73-74.a) Definitions

What's a several obligation? See CC art. 1787. 1] Several Obligors (Passive Severality)

What's a several obligation for the obligors? See CC art. 1787, ¶ 1.OGH 98. Pascal decides that he'd like to hire a couple of persons, preferably a husband and wife team,

to help him look after Belle Terre. After interviewing several applicants, he settles on the newly-weds Ti-Boy and Jolie. Together they execute an act, entitled "Employment Contract," in which Ti-Boy promisesto "tend Belle Terre's vineyards and nutria farm" and Jolie, to "perform housekeeping services inside themanor house," both for a term of 1 year. What kind of obligation is this–several, joint, or solidary? Why?

2] Several Obligees (Active Severality)What's a several obligation for the obligees? See CC art. 1787, ¶ 2.OGH 99. Pascal, who's getting on in years, calls his two children, Ti-Boy and Lil-Fille, together and

says, "It seems I'll be passing on soon. Before I do, I'd like to give each of you an 'advance' on yourinheritance." Pascal then makes out an "Act of Donation" in which he donates $100,000 to Ti-Boy and$100,000 to Lil-Fille. What kind of obligation has Pascal undertaken–several, joint, or solidary? Why?

b) EffectsWhy do we care whether an obligation is several? What real difference does it make? To be more

precise, what are the legal consequences that result from classifying an obligation as several? See CC art.1787, ¶ 3 & Levasseur, Précis, 74.

1] For the ObligorsOGH 100. The same as OGH 98, but with the following modifications. On April 1, 1997, before the

one year term of the contract has expired, Ti-Boy and Jolie, without cause and without his permission, stopworking for Pascal and go to work for Olide, who's offered them a higher price. Several years later, on May1, 2005, Pascal brings suit against Ti-Boy for damages for breach of contract. Three years after that, on May1, 2008, he finally brings suit against Jolie. Jolie immediately files an exception of prescription, arguing thatthe applicable prescriptive period--10 years--had expired on April 1, 2007, more than a year before the suit.In reply, Pascal argues that his suit against Ti-Boy, which was brought within the 10-year period, interruptedprescription not only against Ti-Boy, but also against his co-contractant, Jolie. Who wins? Why? See CCart. 1787 cmt. (e).

2] For the ObligeesOGH 101. The same as OGH 99, but with the following modifications. Time goes by, yet Pascal fails

to pay the promised donations. Ti-Boy, tired of waiting and eager to get his hands on the money so that hecan begin earning interest, then makes a formal for payment on dear old dad, effectively putting him in

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default. Lil-Fille makes no such demand. More time goes by. Ti-Boy and Lil-Fille then file suit againstPascal, seeking payment of the money plus "moratory damages," i.e, compensation for the damages eachsuffered as a result of the delay (lost interest). As we'll learn later, such damages are available only if theobligor is first put in default. Now, Ti-Boy is certainly entitled to those damages, because he put Pascal indefault. But what about Lil-Fille? Why or why not?

One final note before we leave several obligations. Does "several obligation," as used in our CivilCode, mean the same thing as "several obligation," as used in the common law? Why or why not? Wilks v.Allstate Ins. Co., 195 So. 2d 390 (La. App. 3d Cir. 1967) [Levasseur, Text, 85-86].

2) Joint ObligationsLevasseur, Précis, 75.

a) DefinitionsWhat's a joint obligation? See CC art. 1788.

1] Joint Obligors (Passive Jointness)What's a joint obligation for the obligors? See CC art. 1788, ¶ 1.

a ] Of quasi-delictual originOGH 102. While Jean Sot is on the operating table, things go terribly awry. Thanks to a hidden defect

in the device that administers the anesthetic and to the negligence of the anesthesiologist, the negligence ofthe surgeon, and the negligence of the attending nurse, Jean Sot ends up with permanent paralysis from theneck down (i.e., he’s rendered a paraplegic). The manufacturer of the anesthetic device, the two doctors, andthe nurse, you may assume, are together liable for the damages that Jean Sot sustained. How would youdescribe the relationship among these “tort” obligors? Is it several, joint, or solidary? Why? See CC art.2324.A & B, sent. 1.

b ] Of contractual originOGH 103. Pascal, in need of someone to help him extricate his bulldozer from a mudpit, drives to

La Poussière, a Cajun dance hall down in Breaux Bridge. There he finds Jean Sot and Olide and offers themthe job. They accept. What kind of obligation now exists between Pascal, on the one hand, and Jean Sot,on the other? Why? Is either bound for the whole? If so, why? Is it because of the nature of theirrelationship to each other and to the obligee? Or is it because of the nature of the object of their obligation,i.e., the performance? Explain. See CC arts.1788; 1789, ¶ 2; 1794.

OGH 104. Pascal loans $10,000 to Jean Sot. The loan, clearly enough, creates a pure and simpleobligation. But then Jean Sot dies, leaving the debt to be paid by his children, Beau Sot and Meau Sot. Aswas true when Jean Sot was still alive, there's just one performance owed--the repayment of the money onthe due date. But now that single performance is owed by two obligors. Is either bound for the whole? Whyor why not? See CC art. 1416 & cmt. (a).

2] Joint Obligees (Active Jointness)What's a joint obligation for the obligees? See CC art. 1788, ¶ 1.OGH 105. Pascal, upon learning that Jean Sot's wife has just delivered twins, Beau Sot and Meau Sot,

decides to give them a gift. So he draws up an act of donation whereby he promises to give "the twins"$10,000 upon their 18th birthday. The donation is duly accepted. To what kind of obligation has Pascalbound himself? Why? See CC art. 1788 cmts. (c) & (d).

b) EffectsWhy do we care whether an obligation is joint? What real difference does it make? To be more

precise, what are the legal consequences that result from classifying an obligation as joint? See Levasseur,Précis, 76-77.

1] Divisible Joint ObligationRead CC art. 1789, ¶ 1.

a] For the ObligorsWhat effects does a joint obligation have for the obligors?

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OGH 106. Recall OGH 104. Suppose that on the 364th day of the third year Beau Sot, during atelephone call with Pascal, acknowledges that he and Meau owe the debt. Two days later Pascal, still nothaving received payments, sues Beau and Meau. Both plead prescription in their defense. In reply, Pascalargues that Beau, by acknowledging the debt, interrupted prescription. What result? Why? See CC art.3494(3).

b] For the ObligeesWhat effects does a joint obligation have for the obligees? OGH 107. Recall OGH 105. Suppose that 18 years come and go and, still, Pascal does not pay. Beau,

tired of waiting and eager to get his hands on the money so that he can begin earning interest, then makesa formal demand for payment on Pascal, effectively putting him in default. Meau makes no such demand.More time goes by. Beau and Meau then file suit against Pascal, seeking payment of the money plus"moratory damages," i.e, compensation for the damages each suffered as a result of the delay (lost interest).See CC art. 1989 & cmts. As we'll learn later, such damages are available only if the obligor is first put indefault. See CC arts. 1990 & 1991. Now, Beau is certainly entitled to those damages, because he put Pascalin default. But what about Meau? Why or why not?

2] Indivisible Joint ObligationWhat are the effects of a joint indivisible obligation? See CC art. 1789.One final note before we leave joint obligations. Does "joint obligation," as used in our Civil Code,

mean the same thing as "joint obligation," as used in the common law? Why or why not? Wilks v. AllstateIns. Co., 195 So. 2d 390 (La. App. 3d Cir. 1967) [Levasseur, Text, 85-86].

3) Solidary Obligationsa) Solidarity in General

What's a solidary obligation? See CC arts. 1790 & 1794. Saúl Litvinoff , Louisiana Civil Law Treatise:Obligations in General § 7.41, at 152 ("solidarity is a peculiar feature of some obligations that prevents theirdivision, either at the active end [the right] . . . or at the passive end [the duty] . . . ."); Levasseur, Précis, 78.

b) Types of Solidarity1] Active Solidarity

a] DefinitionWhat is a solidary obligation for the obligees? See CC art. 1790. OGH 108 (from Litvinoff). Pascal and Clodice, paramour and concubine, respectively, open a joint

checking account at Cajun Bank & Trust, that is, a single account into which each of them deposits money.There now exists an obligation between the bank, on the one hand, and Pascal and Clodice, on the other.What kind? What duty does that obligation place on the bank? What do bankers call this kind of demand?Now for the big question: Can either Pascal or Clodice withdraw all of the funds or can each withdraw onlythose that he or she has deposited? Why or why not?

b] Procedural IncidentsSuppose you encounter an obligation with multiple obligees and that neither the contract that created

the obligation nor any provision of law makes it clear whether the obligation is joint or solidary with respectto the obligees. In other words, the parties' intent is completely uncertain and there's no law on point. Howshould the obligation be classified? Why? See CC art. 1796.

c] SourcesFrom what sources can active solidarily, i.e., solidarity among the obligees, spring? Is CC art. 1796,

sent. 2 correct? See Levasseur, Précis, 78-81.d] Effects

Why might one care whether a particular obligation is solidary for the obligees as opposed, to say,several or joint? What difference does it make? See Levasseur, Précis, 81-83.

1} Vertical Effects: Effects as Between the Obligees & theCommon Obligor

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Read CC arts. 1790, 1791, 1793, 1792.2} Horizontal Effects: Effects as Between the Obligees

ThemselvesSee Weill & Terré, Droit Civil: Les Obligations n° 928, at 1002 (the obligee who received the

performance is bound to distribute it between himself and the other obligees "in proportion to their respectiverights"). What does that mean?

OGH 109. Recall Pascal's and Clodice's joint checking account? Suppose that after Pascal deposits$4000 and Clodice deposits $6000, Pascal withdraws all $10,000. Is he entitled to keep all of it or must he,at some point, give part of it to Clodice? The latter. How much? What, in other words, is the "proportionof their respective rights"? He must give Clodice $6000 or 60% of the total.

2] Passive Solidaritya] Definition

What is a solidary obligation for the obligors? See CC art. 1794, s. 1. Why is this kind of solidarycalled “passive”?

Read & brief Hidalgo v. Dupuy, 122 So. 2d 639 (La. App. 1st Cir. 1960) [Levasseur, Text, 78-81] &Wooten v. Wimberly, 272 So. 2d 303 (La. Sup. 1973) (the dissenting opinions as well as the majority opinion)[Levasseur, Text, 90-99]. Then read Trahan, Supp, 37-41 (Hoefly & Narcisse).

Next, read (you need not brief) Wilks v. Allstate Ins. Co., 195 So. 2d 390 (La. App. 3d Cir. 1967)[Levasseur, Text, 81-90], and, in connection with that case, answer these questions: (i) what kind ofrelationship, according to the court, existed between the obligors (the insurers); (ii) on what basis did thecourt purport to justify that conclusion?

b] Procedural IncidentsRead CC art. 1794. You might think, if you took the language of the article at face value, that courts

should not, indeed, cannot find "solidarity" unless the contract or the statute, as the case might be, comesright and out and says that the multiple obligors' liability is "solidary." But is that true? What do Wilks,Hidalgo, Wooten, Hoefly, and Narcisse teach us on this score?

c] SourcesFrom what sources can passive solidarily, i.e., solidarity among the obligors, spring? See CC art. 1794,

s. 2. 1} Juridical Acts2} Legislation

a} Presumed IntentOGH 110. Pascal, one of the many survivors of the Great Depression who has no use for banks,

ordinarily keeps his cash--about $50,000 worth--stuffed under his mattress. But now he has to take a trip upnorth--to Shreveport, which will keep him away from home for several days. And so he goes to his friends,Olide and Jean Sot, and asks them to hold the cash for him until he returns. They agree and receive the cash.When Pascal returns a few days later, he tracks down Olide and asks him for "the money." Olide replies, "I'llbe happy to give you my half, 'cause that's what I owe you. But for the other half you'll have to look to JeanSot." Is Olide right? Why or why not? See CC art. 2957.

b} PunishmentOGH 111. Ti-Boy and Jean-Claude, desperate for entertainment, decide on a plan. Under cover of

darkness they sneak into the sacristy of the local church, "borrow" (i.e., steal) 10 bottles of sacramental wine,and proceed to get roaring drunk. When the father learns of it, he's furious and insists that the wine bereplaced. How many of the bottles can he demand that Ti-Boy replace? All 10 or just 5? Why? See CC art.2324.A.

c} Guaranty of PaymentReview the dissenting opinion in Wooten. On what basis did the dissenters conclude that a parent is

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solidarily liable with his child for damages caused by the child's torts?OGH 112. Ti-Boy and Jolie, who are soon to be married, sign a pre-nuptial agreement, one that creates

a "separate property" regime between them. After the marriage, Jolie makes (i.e., buys) groceries (e.g., food,cleaning supplies) at Fontenot's General Store, where she runs up a modest bill. When Ti-Boy gets the billa few weeks later, he calls Fontenot and tells him this: "I feel for you, but you'll have to talk to Jolie aboutthe payment. You see, we have a pre-nup and, as I see it, that's her debt, not mine." Is Ti-Boy right? Whyor why not? See CC art. 2372.

NOTE: Is it possible for a solidary bond to arise between two obligors even though the obligation ofeach springs from a different source, e.g., one from a juridical act and the other from an illicit juridical fact?See CC art. 1797.

d] EffectsWhy might one care whether a particular obligation is solidary for the obligors as opposed, to say,

several or joint? What difference does it make?1} Vertical Effects: Effects as Between the Obligors & the

Common ObligorLevasseur, Précis, 83-87.

a} Consequences of the Idea that There's a Single Debt1/ Performance

From whom can the obligee of solidary obligors demand the performance? See CC art. 1795, ¶ 1.2/ Damages for Nonperformance

Does this effect of solidarity extend to the obligors' "incidental" duty to pay damages in the event ofnonperformance (recall the explication of this notion in Johnson v. Levy)?

OGH 113. Pascal hands his pet nutria, Mr. Nutty, over to Olide and Jean Sot for safekeeping while he'saway on a trip up north. Before he returns, Olide, unbeknownst to Jean Sot, skins Mr. Nutty's hide, sells thehide to a national furrier, then goes into hiding in the Atchafalaya Basin. Pascal, who has since returned andhas learned what happened, wants Jean Sot to pay him damages for the loss of Mr. Nutty. Here's Jean Sot'sresponse: "True, as co-depositary, I owed you a duty to return Mr. Nutty safe and sound, a duty to whichOlide and I were solidarily bound. But that duty I can no longer perform. If you want damages, look to theresponsible party, Olide." What result would you predict? Why? See CC art. 1800.

3/ PrescriptionRecall Hidalgo. In that case, which involved a (tort) suit for personal injuries, the plaintiff sued the

defendant more than a year after the tort. And yet the court rejected the defendant’s exception ofprescription. Why? Would the result be the same under current law? Why or why not? See CC art. 1799.

4/ DefaultRead CC arts. 1989-1991 (skip the comments for now).

5/ Risk of InsolvencyOGH 114. Olide talks Pascal, Clodice, and Jean Sot into joining his venture to develop and market

CajunCare skin care products. But even these new investors can't give him all the capital he needs. And soOlide, with Pascal, Clodice, and Jean Sot in tow, heads down to Cajun Bank & Trust, hoping to take out a$120,000 loan. The bank agrees to extend the loan, provided that the loan is made to all of the investorspersonally and, further, that each of them agrees to be solidarily bound with the others. The investors agreeand the deal is done. Sometime later, Jean Sot becomes insolvent, i.e., his debts outstrip his assets, renderinghim incapable of contributing to the repayment of the loan. Still later, Olide misses the first installment onthe loan. The bank then sues Pascal, the most financially sound of the borrowers, for $120,000. In hisdefense, Pascal contends that he is answerable for, at most, $90,000. His theory? Since Jean Sot is nowinsolvent, his share--$30,000--must be knocked off the total due. What result would you predict? Why? SeeCC art. 1806, ¶ 1.

6/ General Defenses

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What defenses can every solidary obligor raise to defeat the obligee's demand for payment? See CCart. 1801.

a/ Nature of the ObligationWhat is meant by defenses that "arise from the nature of the obligation"?

b/ Common to All ObligorsWhat is meant by defenses that "are common to all the solidary obligors"?

b} Consequences of the Idea That there are MultipleLegal Relations1/ Actions

Read CC art. 1795 ¶ 2.2/ Transmission

OGH 115. Recall OGH 114. Suppose that this time Jean Sot, instead of becoming insolvent, dies,survived by his two children, Beau Sot and Meau Sot. Even later, Olide fails to make the first installmentof the loan on time. The bank then brings suit against Meau Sot, demanding that she pay the full $120,000.In his defense, Meau says he's liable for only 1/2 or $60,000. What result would you predict? Why? SeeCC art. 1416.

3/ RemissionOGH 116. Recall the earlier hypothetical in which Olide, Pascal, Clodice, and Jean Sot bound

themselves solidarily to repay a $120,000 loan. Suppose that Jean Sot, instead of dying, simply falls on hardfinancial times. The bank, instead of taking him to the cleaners, executes a dation en paiement (giving inpayment) with him, whereby it takes title to his land in exchange for a full remission of his debt. Sometimelater, Olide fails to make the first installment on the loan on time. The bank then sues Pascal, financially thestrongest of the four obligors, for the full $120,000. In his defense, Pascal contends that he owes nothing.His argument? That the remission of Jean Sot's debt extinguished the debt in its entirely and as to all of theborrowers. What result? See CC arts. 1888, 1803 & 1804 (as usual, be sure to read the comments!); Trahan,Supp, 42-48 (materials re distribution of the risk of post-release insolvency). This is very complicated andMUI IMPORTANTE!

4/ RenunciationLike any other right, the rights that an obligee has by virtue of his obligors' solidarity, e.g., the right to

demand full performance from any of the obligors, can be renounced or, to use the more common term,waived.

Is any particular form required for such a waiver? See CC art. 1802 & cmt. (b).OGH 117. Recall the hypothetical in which Olide, Pascal, Clodice, and Jean Sot bound themselves

solidarily to repay a $120,000 loan. Suppose that Jean Sot doesn't die, but that the bank sends each of theborrowers a notice that reads as follows: "We hereby notify you that we have renounced solidarity in favorof you and the other borrowers." Sometime later, Olide fails to make the first installment on the loan. Thebank then sues Pascal for $120,000. In his defense, Pascal argues that he's liable for only $25,000. Whatresult would you predict? Why?

OGH 118. The same as OGH 117, except that, this time, the bank sends the following notice to Olidealone: "Because of your longstanding relationship with the bank, we've decided to renounce solidarity asto you and, therefore, hold you responsible only for your share of the debt." Sometime later, Olide fails tomake the first installment on the loan. The bank then sues Pascal for $120,000. In his defense, Pascal arguesthat he's liable for only $30,000. Who's right? Why?

5/ ModalitiesOGH 119. Here's a variation on Hidalgo. Let's suppose, as was likely the case, that the insurance

policy contained a "notice" provision that read something like this: "This insurance shall be effective as toa particular claim only if the insured provides notice thereof to the insurer within 30 days of the date onwhich him knew or should have known (i) that a claim might be made against him and (ii) that that claim

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might be covered under this policy." How should we describe the insurer's duty to pay the tort victim? Isit pure and simple or something else? Why? And how should we describe the tortfeasor-insured's duty topay the victim? Is it pure and simple or something else? Why? Do the differences between these dutiesprevent the tortfeasor-insured and the insurer from being solidary co-obligors? Why or why not? See CC art.1798.

6/ Particular DefensesWhat defenses are “particular” or “personal” to the obligors?

2} Horizontal Effects: Effects as Between the ObligorsThemselves

Read Levasseur, Précis, 87-91.a} Liability

1/ General Rule: Virile-Share LiabilityRead CC art. 1803, ¶ 1, s. 1.OGH 120. Recall the loan hypothetical, the one in which Pascal, Olide, Clodice, and Jean Sot solidarily

bound themselves to repay a $120,000 loan. Insofar as the bank was concerned, how much did each of themowe? But insofar as they were concerned, how much of the did each of them owe? Explain.

2/ Exception: Full LiabilityIs this "virile share" rule an absolute rule, i.e., one that applies in all situations, or is it merely a general

rule, one that admits of exceptions? See CC art. 1804, ¶ 3.OGH 121. Jean Sot's son Beau, now aged 14 years, negligently runs over Clodice on his bicycle.

Who's liable? Beau Sot, for sure. Anyone else? His father, Jean Sot. On what basis? Vicarious liabilityunder CC art. 2318. Assume that Beau and Jean Sot are solidarily bound vis-à-vis Clodice. Now, does thatmean that, as between themselves, Beau and Jean are each liable for 50%? Why or why not? If not, then forhow much, as between themselves, is each liable? Explain. See CC art. 1804, ¶¶ 1 & 3; read Trahan,Supp,49-51.

b} Means of Vindicating Rights1/ Name of Action

By means of what action (i.e., what’s its “name”) do solidary co-obligors enforce their rights againsteach other? See CC art. 1805; Trahan, Supp, 51 (excerpts - Diggs v. Hood, 772 F.2d 190, 193 (5 Cir. 1985)th

(Rubin, J.)).2/ Procedure

How does it work? See La. Code Civil Proc. art. 1111 (“The defendant in a principal action by petitionmay bring in any person, including a codefendant, who is his warrantor, or who is or may be liable to himfor all or part of the principal demand.”); compare Fed. Rule Civ. Proc. 14.

Suppose that the common obligee remits the debt of one of the solidary obligors. If the commonobligee then sues one of the remaining obligors, can that obligor then third-party the released obligor? Or,if one of the remaining obligors were to pay voluntarily, can that obligor then bring an original action againstthe released obligor? Explain. See CC art. 1805 cmt. (c).

Suppose that the common obligee renounces solidarity in favor of one of the solidary obligors. If thecommon obligee then sues one of the other obligors, can that obligor then third-party the renounced obligor?Or, if one of the other obligors were to pay voluntarily, can that obligor then bring an original action againstthe released obligor? Explain.

3/ RecoveryHow much can the solidary obligor who's been sued and forced to pay or who voluntarily paid get from

each of the other obligors in such an action, i.e., a third-party demand or an original action for contributionor indemnity? See CC art. 1804 ¶ 2.

c} Allocation of Risk of InsolvencyWhat happens in the event that one of the solidary obligors becomes insolvent? Who “eats” the loss?

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1/ In the Absence of Renunciation or RemissionOGH 122. Recall the loan hypothetical, i.e., that in which Pascal, Olide, Clodice, and Jean Sot bound

themselves solidarily to repay a $120,000 loan. Suppose that Jean Sot becomes insolvent before the loan isrepaid. Now, as far as the bank's concerned, that's of no moment: it can still demand 100% of the total--thefull $120,000--from any of the three remaining obligors. The loss, then, falls on the obligors, not the obligee.But as among themselves, for how much of this loss is each of the solvent obligors responsible? Why? SeeCC art. 1806 ¶ 1.

2/ After Renunciation or Remissiona/ Renunciation

OGH 123. The same as before, except that, this time, the bank renounces solidarity in favor of Olidebefore Jean Sot becomes insolvent. Is the result any different? In particular, is Olide now relieved of theduty to participate in underwriting the loss due to Jean Sot's insolvency? To put it another way, must Pascaland Clodice bear that loss without any help from Olide? Why or why not? See CC art. 1804 ¶ 2.

b/ RemissionOGH 124. The same as OGH 123, except that, this time, the bank remits the debt in favor of Olide

before Jean Sot becomes insolvent. Is the result any different? Why or why not? See CC art. 1804, ¶ 1;1803 cmt. (d).------------

Now, to review the principles governing solidarity, you should read Trahan 51-64. You may conductthis review at your leisure, so long as you finish it before the exam.------------

6. By The Number of Their ObjectsRead Levasseur, Précis, 93-101.

a. Conjunctive ObligationsWhat’s a conjunctive obligation? See CC art. 1807.OGH 125. On January 1, 1997 Pascal leased the “back 40" of his estate, Belle Terre, to Olide of a term

of one year and a rent of $1200, which was to be paid in monthly installments of $100 on the first day of eachmonth of that one year term. Though Olide moved onto and used the back 40, he never paid any of the rent.Pascal has just filed suit against Olide, seeking to recover the entirety of the unpaid rent–$1200. In hisdefense, Olide contends that Pascal can recover some, but not all, of that sum. Who is right and why? SeeCC art. 3494(3); CC art. 1807 cmt. (e); CC art. 1807 cmt. (h).

b. Alternative ObligationsWhat’s an alternative obligation? See CC art. 1808.OGH 126. On February 1, 1999, Pascal entered into a “take or pay” contract with Cajun Oil and Gas

Co. According to the contract, Cajun must, by each successive anniversary of the contract, either producea certain volume of oil from his property (and then pay the stipulated royalties) or pay Pascal a fixed fee of$100. It’s now February 16, 2000 and still Cajun has done nothing. What are Pascal’s rights? Explain. SeeCC arts. 1809, 1810, 1812.

7. By the Divisibility of Their Objectsa. Definitions

What's a divisible obligation? See CC art. 1815, ¶ 1. What's an indivisible obligation? See CC art.1815, ¶ 2. See Levasseur, Précis, 106-07. Then see Saúl Litvinoff, THE LAW OF OBLIGATIONS § 9.2, at 227,in 5 LOUISIANA CIVIL LAW TREATISE (1992):

According to the Louisiana Civil Code, an obligation is divisible when the objectof the performance is susceptible of division. On the other hand, an obligation isindivisible when the object of the performance, because of its nature or because of theintent of the parties, is not susceptible of division.

It should be clearly realized that, in the intendment of the law, the word “object”

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is here an integral part of the expression “object of the performance,” that is, anintegral part of that which the obligor is bound to give, or to do, or not to do. In thatperspective, whether the object of a performance is susceptible of division dependson whether it may be rendered or accomplished in parts. That, in turn, may dependeither on the nature of the object as a physical entity, or on the intention of the parties.

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b. Sources of Indivisibility (& Divisibility)Read CC art. 1815 ¶ 2; Levasseur, Précis, 107-13..

1) Indivisibility (& Divisibility) by Naturea) Natural Indivisibility

1] Absolute Natural Indivisibilitya] Duties to Deliver or to Create Unitary Corporeal Thingsb] Duties Not to Do

2] Relative Natural IndivisibilityRead & brief S&W Investments Co. v. Otis W. Sharp & Son, 170 So. 2d 360 (La. Sup. 1964)

[Levasseur, Text, 127-32].b) Natural Divisibility

1] Duties to Deliver or Create Collections of Physically DistinctCorporeal Things

2] Duties to GiveOGH 127. Pascal, the owner of Belle Terre, has decided that he'd like to sell it to his children Ti-Boy

and Lil-Fille, 1/2 to each, before he dies. Is it necessary that he sell Ti-Boy his half and Lil-Fille her half atthe same time? Could he give him his half today and her hers tomorrow or him his half this year and her halfnext year, etc.? Why or why not?

2) Indivisibility by IntentReview S&W Investments. The court provided not one but two rationales for its decision to classify

Otis' performance as indivisible. One, that the performance was indivisible by nature, we've alreadyexamined. What was the other one?

3) Indivisibility by LawRead CC arts. 3280 & 652.

c. Effects of Indivisibility (& Divisibility)Why does anyone care whether a particular obligation is divisible or indivisible? What, in other words,

are the consequences of classifying a particular obligation one way or the other? See Levasseur, Précis, 113.1) Effects of Divisible Obligations

What are the effects of divisibility? See Levasseur, Précis, 114.a) For the Original Subjects

1] Single Obligee & Single ObligorRead CC art. 1816 & Saúl Litvinoff, Louisiana Civil Law Treatise: Obligations § 9.11, at 230 (even

if the performance is divisible, "the obligee may not be forced to accept a partial performance" ). In viewof these authorities, couldn’t one say that the issue presented in S&W Investments was illusory? Explain.

2] Multiple Obligees &/- Multiple Obligorsb) For the Successors to the Original Subjects

Read CC art. 1817 & cmt. (b) & CC art. 876. OGH 128. Olide and his sidekick Jean Sot, in need of cash for a new investment, turn to their friends

Pascal and Clodice for help. After considerable cajoling by Olide, Pascal and Clodice agree to put up$12,000 each for a "loan fund," from which Olide and Jean Sot will be allowed to borrow. Pascal andClodice put up the money and, before long, Olide and Jean Sot borrow all $12,000. But then tragedy strikes.

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It seems that Clodice and Jean Sot, while gathering moss in the Marais des Larmes from Jean Sot's pirogue,disturbed several aligators, who overturned the pirogue and gobbled the mossgatherers right up. Clodice wassurvived by her two children, Ti-Boy and Lil-Fille, and Jean Sot by his three children, Beau Sot, Meau Sot,and Seau Sot. (i) For how much of the $12,000 is Beau, Meau, and Seau each liable and (ii) to how muchof the $12,000 are Ti-Boy and Lil-Fille entitled? Why? See CC art. 1817.

2) Effects of Indivisible ObligationsWhat are the effects of indivisibility? See Levasseur, Précis, 115-20; read Trahan, Supp, 64-67.

a) For the Original SubjectsWhat are the effects of indivisibility for the original subjects of the obligation?

1] Single Obligee & Single Obligor2] Multiple Obligees &/- Multiple Obligors

Read CC art. 1818. What’s the significance, in terms of legal effects, of the proposition that indivisibleobligations with multiple obligors are “subject to the rules governing solidary obligations”? Does theproposition mean that there are no differences, in terms of effects, between indivisible obligations withmultiple (joint) obligors, on the one hand, and solidary obligations, on the other? Explain. See CC art. 1820.

OGH 129. Imagine two solidary obligors. One of them dies, survived by two children. For how muchof the total debt is each of those children bound? 50%. Why? Each owes half of what his ancestor owed,which was 100%. Now, suppose that the two obligors are not solidary, but that the performance they jointlyowe is indivisible. One of them dies, survived by two children. For how much of the total debt is each ofthose children bound? Why? See CC art. 1819.

b) For the Successors to the Original SubjectsOGH 130. Recall OGH 129. This time, however, the loan agreement stipulates that the obligation,

which is joint (not solidary), "shall be indivisible for both the lenders and the borrowers." (i) For how muchof the $12,000 is Beau, Meau, and Seau each liable and (ii) to how much of the $12,000 are Ti-Boy and Lil-Fille entitled? Why? See CC art. 1819.D. Transfer of Obligations

1. In GeneralWhat do we mean by the "transfer of obligations"? Read the heading for Chapter 4 of Title III, Book

III and then the headings of the sections within that chapter. See Saúl Litvinoff, Louisiana Civil LawTreatise: Obligations § 10.1, at 246 ("The transfer of an obligation is the substitution of a new person for oneof those between whom the legal relation was originally established, without altering in any manner therelation itself."); Levasseur, Précis, 121.

Do the various modes of transfer referred to in those headings involve the transfer of obligations as awhole or the transfer of something else? If it’s “something else,” what is this something else? Explain.

Does Chapter 4 contain an exhaustive enumeration of modes of transferring obligations? Why or whynot? If not, what’s missing?

2. Inter Vivos Transfers of Duties & Rightsa. Transfer of Duties

1) Assumptiona) Definition

What's an "assumption"? See Levasseur, Précis, 121-23.b) Methods

Read CC arts. 1821 & 1823.1] By Agreement Between the Obligor & a Third Person

a] PrerequisitesWhat are the prerequisites for the first method of effecting an assumption, i.e., agreement between

obligor and third person? See CC art. 1821, ¶ 1; Levasseur, Précis, 123-26.1} A Valid Contract

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2} Written FormIs any particular form required for such a contract? See CC art. 1821, ¶ 1, s. 1. Does that mean that

an oral contract of this kind is completely unenforceable?OGH 131 ( loosely based on Guaranty Income Life Ins. Co. v. Prepaid Dental Mktg. Sys., 551 So. 2d

769 (La. App. 1st Cir. 1989) [Levasseur, Text, 480-83]). For several years Cajun Insurance Co. soldinsurance policies for dental and orthodontic services. During the latter part of that period, Cajun hiredPascal to line up dentists and orthodontists to perform services for its policyholders. Over time, however,Pascal wearied of this work and, so, transferred to Olide his obligation toward Cajun. The assumptioncontract was not, however, reduced to writing. Olide promptly assumed Pascal’s duties. Before long,however, Olide found that he was losing money on the deal. And so he stopped work. Pascal then broughtsuit against Olide for breach of contract. In his defense, Olide, citing CC art. 1821, ¶ 1, sent. 2, argued thatthe supposed assumption contract between Pascal and himself was unenforceable because it lacked properform, i.e., was oral rather than written. What result? Why?

3} Not the Consent of the ObligeeIs the consent of the obligee required? Read CC art. 1821, ¶ 2.

b] EffectsWhat are the effects of an assumption effected by means of an agreement between the obligor and the

third person?1} Vertical Effects: Those Between the Obligee, on the one

Hand, & the Obligor & the Third Person, on the OtherRead Levasseur, Précis, 128-29.

a} The Third Person Becomes an Additional ObligorWhat are the effects of such an assumption between the obligee, on the one hand, and the obligor and

the third person, on the other? See CC art. 1821, ¶ 3OGH 132 (loosely based on McCrory v. Terminix Serv. Co., 609 So. 2d 883 (La. App. 4th Cir. 1992)

[Levasseur, Text, 477-79]). Back in 1962 Fowler, a homeowner, hired Terminix to provide "termiteprotection" for his residence and garage. Terminix's duties included inspecting the property for termites eachyear and, when necessary, applying termiticides. The contract provided that Fowler was to pay Terminixa fixed fee of $100 per year, due on December 31, and, further, that, if he failed to pay by that deadline, hewould pay Terminix an additional “late fee” of $10 per month of the delay. Sometime later Fowler sold theproperty to the McCrorys. The McCrorys, after Fowler told them about his arrangement with Terminix,which, he said, cost him “only $100 per year,” agreed in writing to "assume the terms" of Fowler's contractwith Terminix. When December 31 rolled around, the McCrorys neglected to send in their $100 payment.When they received a notice from Terminix the next week alerting them that $110 was then due, theMcCrorys balked, contending that they knew nothing about any late fees. To how much money is Terminixentitled from the McCrorys? Why?

b} The Co-Obligors Become "Solidarily" Bound (SortOf)

What is the nature of the obligation of these co-obligors toward the obligee? See CC art. 1821, ¶ 3, &cmts. (a), (b), & (f). Are the comments correct?

OGH 133. Jean Sot borrows $5000 from Olide. Before Jean Sot repays the loan, Olide inadvertentlysets Belle Terre's Muscadine vinyards on fire, destroying the entire Muscadine crop. Pascal demands thatOlide make good the loss, which Pascal estimates at $7,000. When Jean Sot shows up at Olide's place to payoff the loan, Jean Sot says, "I tell you what. Instead of paying me, why don't you just assume my debt toPascal and we'll call it even." Jean Sot agrees. Olide then draws up and both of them sign an "Act ofAssumption" that memorializes their agreement. The act is straightforward and simple: "In considerationfor Olide's canceling my debt to him, I, Jean Sot, agree to assume Olide's debt to Pascal." After Olide sendsa copy of the act to Pascal, Pascal calls on Jean Sot and demands $7,000. Must Jean Sot pay Pascal $7,000?

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Why or why not? If not, then how much must be pay? Why? See CC art. 1822, ¶ 1, & cmt. (b).OGH 134. The same as OGH 133, except that this time Jean Sot agrees to assume Olide's debt to

Pascal for a different reason, namely, friendship. When Jean Sot hears of his friend Olide's predicament,Jean Sot, realizing that Olide doesn't presently have the funds to pay off Pascal, offers to help by "assumingyour debt to Pascal." Jean Sot even goes so far as to reduce this commitment to writing. At the time, JeanSot doesn't owe Olide a cent. After Olide sends a copy of the writing to Pascal, Pascal calls on Jean Sot anddemands $7,000. Must Jean Sot pay Pascal $7,000 now? Why or why not?

OGH 135. The same as OGH 134 (the gratuitous assumption), except as follows. When Jean Sotcommitted himself to assuming Olide's debt to Pascal, Jean Sot and Olide were in Le Cadien Assoiffé (thethirsty Cajun) and Jean Sot, who's renowned for being unable to hold his liquor, had just polished off 3bottles of vin de soco (Muscadine wine). As before Pascal, upon learning of Jean Sot's commitment,demands $7,000 from Jean Sot. Must Jean Sot pay the $7,000 now? Why or why not? See CC art. 1918 &cmt. (b); art. 1919; & art. 1822, ¶ 2

c} The Assuming Obligor's Defenses Are ExpandedRead CC art. 1822.

2} Horizontal Effects: Those Between the Obligor & theThird Persona} The Original Obligor & The Third Person Become

Solidary Co-Obligors (Or Do They?)Read Levasseur, Précis, 126-28.

1/ Onerous AssumptionsOGH 136. Recall OGH 133, the hypothetical in which Jean Sot, to discharge his $5,000 debt to Olide,

assumed Olide's $7,000 debt to Pascal. As we noted earlier, this assumption was merely partial, in particular,bound Jean Sot only up to the amount of his debt to Olide, i.e., $5,000. Now, suppose that Jean Sot pays the$5,000. Is Olide liable to him for anything? To put it another way, can Jean Sot get anything out of himthrough a “contribution action” or something like it? Why or why not? See CC art. 1821 cmt. (c), sent. 5.

2/ Gratuitous AssumptionsOGH 137. Recall OGH 134, the hypothetical in which Jean Sot, out of the goodness of his heart,

assumed Olide's $7,000 debt to Pascal . As we noted earlier, this assumption was complete, that is, boundJean Sot to pay the full $7,000. Now, suppose he pays it. Is Olide liable to him for anything? To put itanother way, can Jean Sot get anything out of him through a “contribution action” or something like it? Whyor why not?

b} The Third Person's Debt to the Original Obligor (IfAny) May Be Extinguished

OGH 138. Recall OGH 133, the hypothetical in which Jean Sot, to discharge his $5,000 debt to Olide,assumed Olide's $7,000 debt to Pascal . Now, suppose that Jean Sot pays Pascal the $5,000 that he owes byvirtue of the assumption. What, if anything, happens to Jean Sot's debt to Olide? Why?

c} The Original Obligor May Be Able to Enforce theAssumption Contract

OGH 139. Recall OGH 133, the hypothetical in which Jean Sot, to discharge his $5,000 debt to Olide,assumed Olide's $7,000 debt to Pascal. Suppose that, though Pascal is willing to receive payment from JeanSot, Jean Sot refuses to pay. (i) Can Olide go to court seeking specific performance, i.e., an injunctiondirecting Jean Sot to pay? Why or why not? (ii) And if, as a result of Jean Sot's nonpayment, Pascal sustainsdamages and, further, forces Olide to make good those damages, can Olide recoup that loss from Jean Sot?

2] By Agreement Between the Obligee & a Third Persona] Prerequisites

Read CC art. 1823, ¶ 1; Levasseur, Précis, 129-33.

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1} A Valid Contract2} Written Form

Is any particular form required for such a contract? See CC art. 1823, sent. 2, & cmt. (b), & art. 1847.3} Not the Consent of the Original Obligor

What about the consent of the original obligor? See CC art. 1823 cmt. (c), sent. 2.b] Effects

1} Vertical Effects: Those Between the Obligee, on the oneHand, & the Obligor & the Third Person, on the Other

Read Levasseur, Précis, 134-35.a} The Third Person Becomes an Additional Obligor

What are the effects of such an assumption between the obligee, on the one hand, and the obligor andthe third person, on the other? See CC art. 1822, sent. 3.

b} The Co-Obligors Do Not Become "Solidarily" BoundRead CC art. 1823 cmt. (c).

c} The Assuming Obligor's Defenses Are SimultaneouslyLimited & Expanded

What defenses is the assuming obligor of this kind of assumption, i.e., one by agreement between theobligee and the assuming obligor, permitted to raise? Where, to begin with, do we find the answer? See CCart. 1824.

1/ Defense Based on His Relationship with theOriginal Obligor Prohibited

OGH 140. Olide, through his own fault, destroys Belle Terre's Muscadine crop, worth $7,000. SinceOlide can't pay off the debt himself, he turns to his friend, Jean Sot, for help. But Jean Sot wants somethingin return, i.e., for Olide to "work it off" by doing odd jobs for him here and there. Olide agrees. Jean Sotthen goes to Pascal and offers to "assume" Olide's debt to him. Pascal, who'd just about written off the debt,jumps at the offer. The two agree that Jean Sot will pay off the debt in installments of $1,000 per month.Things start off well: Jean Sot makes several payments, during which time Olide works for Jean Sot. Butthen Olide mysteriously drops out of sight. When the next installment of the debt comes due, Jean Sotrefuses to pay. His theory? That since Olide has breached his duty to Jean Sot, the duty that was the "cause"of Jean Sot's assumption, Jean Sot is released from his duty to Pascal. Pascal sues Jean Sot. What resultwould you predict? Why? See CC art. 1824, ¶ 1.

2/ Defense Based on the Relationship Between theObligee & Original Obligor Permitted

OGH 141. The same as OGH 140, except as follows. Olide's duty to pay Pascal $7,000 arose as aresult not of an illicit juridical fact, but of a juridical act, namely, a sale of the Muscadine crop. There's justone problem: the Muscadines, as it turns out, aren't the kind that Olide thought they were. Whereas hewanted red Muscadines, so that he could make red vin de soco, Pascal's are green Muscadines. Pascal shouldhave known this. But by the time the mistake is discovered, the assumption is already a done deal. (i) DoesOlide have a defense to liability on the original contract? If so, what is it? (ii) Could Jean Sot raise this samepoint as a defense to liability on the assumption contract? Explain. See CC arts. 1949 & 1824, ¶ 2, sent. 1.

2} Horizontal Effects: Those Between the Obligor & theThird Person

Read Levasseur, Précis, 136.a} Upon Performance the Third Person May be

Subrogated to the Obligee's RightsIt's possible for the assuming obligor, upon performing the obligation, to become subrogated to the

obligee's rights, in particular, his rights against the original obligor. Now, under what circumstances willsubrogation take place?

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b} The Original Obligor May Be Able to Enforce theAssumption Contract

2) Delegationb. Transfer of Rights: Subrogation

1) DefinitionWhat's "subrogation"? See CC art. 1825, sent. 1. Compare Saúl Litvinoff, Louisiana Civil Law

Treatise: Obligations § 10.1, at 246 (the “transfer” of an obligation is "the substitution of a new person forone of those between whom the legal relation was originally established, without altering in any manner therelation itself." Then read CC arts. 1826 & 1828 & Levasseur, Précis, 137-39.

2) TypesRead CC art. 1825, sent. 2. The two basic types of subrogation are “conventional” and “legal.” Are

they mutually exclusive of each other, so that, if one can claim legal subrogation, one can’t claimconventional subrogation? Or are they potentially cumulative, so that, if the facts allow it, one could claimboth? What does CC art. 1830, sent. 2 suggest? Is it that conventional subrogation is excluded if legalsubrogation occurs? Or is it that, if one gets a conventional subrogation where legal subrogation would occuranyway, then, though the conventional subrogation is effective, the extent of that conventional subrogationis limited to what’s allowed under legal subrogation?

a) ConventionalRead CC arts. 1827 & 1828; Levasseur, Précis, 139.

1] By the ObligeeWhat are the prerequisites to conventional subrogation by the obligee? See CC art. 1827; Levasseur,

Précis, 140-42.a] A Valid Contractb] No Particular Form

Must a conventional subrogation by the obligee be in any particular form? See CC art. 1827 cmt. (f).Must such a subrogation, however, at least be express? Why or why not?

c] At the Time of PerformanceMust a subrogation by the obligee be made at any particular time, in particular, be made before, at the

time of, or after the third person pays the obligee? See CC art. 1827 cmt. (f); art. 1854; & art. 1855.Read & brief Cox v. W. M. Heroman & Co, 298 So. 2d 848 (La. Sup. 1974) (Tate, J.) [Levasseur, Text,

501-12]. Then read Weill & Terré, DROIT CIVIL: OBLIGATIONS ("Before this moment [the time of payment],it would be too soon [to consent to a subrogation]. [T]he creditor would simply be able to consent to apromise of subrogation in favor of the future solvens [third person]."); Marty, Raynaud, & Jestaz, DROIT

CIVIL: OBLIGATIONS ("Certainly a subrogation could be made in view of a payment to be effecutated [later],but it would be a matter only of a promise of subrogation . . . ."); then read Trahan, Supp, 67-68.

NOTE: In my judgment, whether “simultaneity” of payment & act of subrogation is requiredREMAINS A DISPUTED ISSUE, notwithstanding Cox. On the exam, you will be asked about this issue.And in your answer, you will be expected to show that you understand both of the competing viewpoints,not just that of the Cox majority.

d] Not the Original Obligor's ConsentDo the obligee and the third person, to effect a valid subrogation, need the original obligor's consent?

See CC art. 1827 & Cox v. Heroman [Levasseur, Text, at 507-09].e] But Notice to the Obligor (for Some Purposes)

OGH 142. Olide owes Pascal $1000. Jean Sot pays off Olide's debt to Pascal, whereupon Pascalconventionally subrogates Jean Sot to his (Pascal's) rights against Olide. But suppose that, before word ofthe subrogation reaches Olide, he manages to come up with some funds and makes the payment to Pascal.Can Jean Sot, as subrogee, demand that Olide pay him? Why or why not? See CC art. 1827 & cmt. (c).

2] By the Obligor

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What are the prerequisites to conventional subrogation by the obligor? See CC art. 1828; Levasseur,Précis, 143-44.

a] A Valid Contractb] Written, Express Form

Must a conventional subrogation by the obligor be in any particular form? See CC art. 1828, ¶ 2.c] Before Payment?

Must a conventional subrogation by the obligee be made at any particular time? What does CC art.1828, ¶ 2 imply?

d] Not the Original Obligee's ConsentDo the obligor and the third person, to effect a valid subrogation, need the consent of the obligee? See

CC art. 1828, ¶ 1.b) Legal

Read CC art. 1829; Levasseur, Précis, 144-47; Trahan, Supp, 69-75 (excerpt from Litvinoff, LouisianaCivil Law Treatise: Obligations).

1] Obligee Who Pays a Preferred Obligeea] Explication

OGH 143. Olide wants to buy Terre Facile (an estate) from Clodice. There's just one problem: theasking price, which reflects the property's fair market value, is $250,000, yet he has only $100,000. To raisethe money necessary to close that gap, Olide borrows $100,000 from Cajun Bank & Trust. The loan issecured by a mortgage on the estate. A short time later, Olide, finding himself in need of money, borrows$100,000 from Creole Bank & Trust. This loan, unlike the first, is note secured by a mortgage on the estate.And a short time after that, Olide, finding himself in need of still more money, borrows $100,000 from BayouBank & Trust to pay off the note to Cajun. The loan from Bayou, like the first loan but unlike the second,is secured by a mortgage (a so-called “second mortgage”) on the estate. Time goes by. Then Olide defaultson the first loan, in response to which Cajun threatens to foreclose. If Cajun follows through on its threat,which of Olide’s creditors would end up getting paid? Why? See CC art. 3307, especially ¶ (3). Assume(i) that Terre Facile is Olide's only asset; (ii) that the market value of the property has now slipped to$180,000; (iii) that under the terms of the second and the third loan agreements, a foreclosure by Cajunwould constitute a “default”by Olide on his loans from Creole and Bayou.

OGH 144" The same as before (OGH 143), except that, before Cajun follows through on its threat toforeclose, Creole, whose loan officers believe that Terre Facile’s value will soon turn around and, in a yearor so, may well exceed $300,000, pays Cajun off, thereby averting (i) a foreclosure by Cajun and (ii) adefault by Olide on his loans from itself (Creole) and from Bayou. What, precisely, would Creole “get” fromits payoff to Cajun, aside from averting Cajun’s foreclosure and Olide’s default? See CC art. 1829(1).

Would you consider Creole’s decision to be a good one from a “business” standpoint? Why or whynot? As you ponder that question, consider these hypotheticals:

OGH 144$. The same as before (OGH 144"), except that one year after the payoff, Olide defaults onhis loan to Bayou, in response to which Bayou forecloses. At the sheriff’s sale, Terre Facile sells for$280,000 (in other words, Creole’s prediction of appreciating value came true). Who’s entitled to thatmoney? Why? In this case, what did Creole gain by paying off Cajun? What did it lose?

OGH 144(. The same as before (OGH 144$), except that Terre Facile sells for $150,000 (in otherwords, Creole’s prediction of appreciating value did not come true). Who’s entitled to that money? Why?In this case, what did Creole gain by paying off Cajun? What did it lose?

b] LimitationCan an inferior creditor who pays off a superior creditor always claim legal subrogation to the rights

of that superior creditor, no matter what the circumstances? Read La. Rev. Stat. 9:4802(A) & (B); 4811; &4822. Then read & brief Pringle-Associated Mtg. Corp. v. Eanes, 226 So. 2d 502 (1969) [Levasseur, Text,497-501].

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2] Purchaser Who Pays Secured Creditor with Purchase MoneyOGH 145. Clodice owns Terre Facile, an estate that is subject to a $100,000 first mortgage in favor

of Cajun Bank & Trust and a $50,000 second mortgage in favor of Creole Bank & Trust. Having decidedthat she no longer wants the property, she offers to sell it to Olide for $100,000. Olide accepts the offer. Butthen, instead of turning $100,000 over to Clodice to pay the price, he turns $100,000 over to Cajun to payoff the first mortgage. Why might Olide want to do such a thing? What, precisely, does it get him? Can hedo it? Can't Clodice object? Didn't Olide owe her the price? And didn't Olide default on his obligation toher when he didn't pay it? So can't she sue him for it? And so, in that case, wouldn’t he end up payingtwice?

Why might anyone do such a thing? Read Trahan, Supp, 75-77.3] Obligor Who Pays Debt Owed With/For Others

a] First Requirement: Debt Owed with or for Others1} Debt Owed with Others

Read Trahan, Supp, 77-80 (summary of Aetna Ins. Co. v. Naquin). Then read (but don’t worry aboutbriefing) Martin v. Louisiana Farm Bureau Cas. Ins. Co., 638 So. 2d 1067 (La. Sup. 1994) [Levasseur, Text,513-16]. Can these cases be reconciled? Now read Trahan, Supp, 81-87 (the French approach to the legalsubrogation of insurers).

2} Debt Owed for OthersOGH 146. Before Bayou Bank & Trust will approve Olide's application for a $100,000 loan, it requires

that Olide come up with a financially sound "surety" or "guarantor," i.e., someone who will promise to paythe debt in the event Olide fails to do so. After considerable arm-twisting by Olide, Pascal agrees to do it.At the closing, Olide signs the loan agreement as "principal debtor" and Pascal the "continuing guaranty"agreement as surety. Time goes by and sure enough, Olide defaults on the loan. At the bank's insistence,Pascal them pays off the debt. He now wants Olide to reimburse him. Is Pascal entitled to reimbursement?Why or why not?

b] Second Requirement: Recourse Against the Others(i) What is the requirement?(ii) What does the requirement mean? Does the related comment – CC art. 1829 cmt. (c) – accurately

explain it? Does the case cited in the comment – Gay v. Blanchard – support that conclusion? What aboutthe treatise written by the author of the comment, i.e., Professor Litvinoff? See (again) Trahan, Supp, 73-75.

(iii) Is the requirement superfluous or at least misstated? Can you think of a case in which, though thefirst requirement for legal subrogation under CC art. 1829(3) is satisfied, the second is not? Won’t thesecond requirement almost always be satisfied – automatically, as it were – anytime and every time that thefirst requirement is satisfied? But there will be some extraordinary cases, will there not, in which the firstrequirement is satisfied but the second is not? When? In view of those cases, how might the secondrequirement be restated to reflect its true significance more clearly and with less confusion?

c] Other Requirements?We have seen that, at least according to the jurisprudence, legal subrogation under CC art. 1829(1) is

available only if the payor is a “stranger” to the debt he pays, in other words, only if he pays a debt that isnot “his.” Does the same requirement / limitation apply to legal subrogation under CC art. 1829(3), that isto say, can one claim legal subrogation under CC art. 1829(3) only if the debt one pays is not one’s own?Doesn’t the answer to this question become obvious when one considers the kinds of situations to which CCart. 1829(3) supposedly applies, i.e., passive solidarity, indivisibility, suretyship? Isn’t a solidary debt thedebt of each solidary obligor (so that, as to each such obligor, the debt is “his” debt)? Isn’t an indivisibledebt the debt of each indivisible obligor (so that, as to each such obligor, the debt is “his” debt)? Isn’t a debtowed by a surety “his” debt, at least once the principal obligor defaults? Wouldn’t it be the case, then, thatif legal subrogation under CC art. 1829(3) were barred as to any obligor who pays his own debt, then thatkind of legal subrogation would always and everywhere be impossible?

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3) Effectsa) Subrogation In General

Read Levasseur, Précis, 147-50.1] Complete Subrogation

OGH 147. Pascal loans Olide $100,000. The debt is secured by (i) a mortgage on Olide's estate, TerrePuante, in favor of Pascal and (ii) a "continuing guaranty" agreement that Clodice, acting as surety for Olide,executed in favor of Pascal. A short time later, Olide defaults on the debt. Olide can't pay, at least not yet,but Pascal needs his money right away. When he hears of their predicament, Jean Sot, noting tht he canafford to give Olide more time to come up with the money, offers to pay off Pascal in full, provided thatPascal will subrogate him to his (Pascal's) rights against Olide. Pascal accepts the offer and the deal is done.Sometime later Olide defaults on the loan again. Pascal then brings suit against Olide and Clodice and,further forecloses on the mortgage? Jean Sot intervenes in the suit, contending that he, not Pascal, is entitledto assert those rights. Who's entitled to sue Olide and for what can he sue? Explain. See CC art. 1826, ¶ 1.

2] Partial Subrogationa] General Rule

OGH 148. The same as OGH 147, except that, this time, Jean Sot pays $50,000 of Olide's debt toPascal and Pascal subrogates Jean Sot only up to that amount. As before, Olide defaults after thesubrogation. Assume that his assets and those of Clodice combined amount to $90,000. Now who's entitledto sue Olide and for what? Explain. See CC art. 1826 & cmt. (e).

b] ExceptionOGH 149. The same as OGH 147, except that the original loan agreement between Pascal and Olide

provides that Olide's obligation to repay the loan shall be "indivisible." Now who's entitled to sue Olide andfor what? Explain. See CC art. 1826 & cmt. (e).

b) Legal SubrogationRead Levasseur, Précis, 150-55.OGH 150. Recall the case of Aetna Ins. Co. v. Naquin. Suppose that the Ficarras' losses had amounted

to $10,000 and that the insurer, as was the case, had them paid only $7,250. Could Aetna have recoveredthe full $10,000 from Naquin then? Why or why not? See CC art. 1830.

OGH 151. The same as OGH 150, except that this time the Ficarras, upon receiving payment fromAetna, execute an act of subrogation in Aetna's favor, one that purports to subrogate Aetna "to the full extentof our claim against Naquin." Can Aetna now recover the full $10,000 from Naquin? Why or why not? SeeCC art. 1830, sent. 2.

OGH 152. The same as OGH 150, except that Aetna is not the Ficarras insurer. Because of somepeculiar circumstances, i.e., Aetna represents certain other parties who have unrelated claims against Naquinno one of which is sufficiently large to justify suing him on it, Aetna has decided to acquire as many claimsas it can against Naquin. And so, when Aetna learns of the Ficarras' claim against him, Aetna offers to paythe Ficarras $7,500 if they will subrogate Aetna to its rights against Naquin. The Ficarras, who don't wantto sue Naquin and need the money right away, jump at the offer. Can Aetna now recover the full $10,000.Why or why not? See CC art. 1830, sent. 1 & cmts. (a) & (b).E. Extinction of Obligations

1. In GeneralWhat does the expression "extinction of obligations" mean? VOCUBULAIRE JURIDIQUE (“Extinction

of an obligation: . . . [the] undoing of the juridical link between obligee and obligor, which carries with it theliberation of the latter.") What are the different “causes” or “modes” of extinction? Read the headings ofthe subdivisions of CC bk. 3, tit. 3, chapter 6. Is this list complete and exclusive? See CC art. 1767, ¶3; CC art. 3447 & cmt. (b). See generally Levasseur, Précis, 173.

2. Modes of Extinction of Obligations Described in Chapter 6a. Performance

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Read CC art. 1854; Levasseur, Précis, 174-80.1) Definition

But what does "performance" mean? CC art. 1854 cmt. (b).2) Parties to the Performance

a) Who May/Must Perform1] The Obligor2] Third Persons

Can a “third person” render the performance and, by so doing, extinguish the obligation?a] The Obligee & Obligor Both Consentb] The Obligee or Obligor Objects

1} General RuleRead CC art. 1855, ¶ 1, up to the last dependent clause.

2} ExceptionRead the last dependent clause of CC art. 1855, ¶ 1. When will the obligee have an interest in the

obligor rendering the performance himself? When will the obligor have an interest in rendering theperformance himself? Read Trahan, Supp, 87 (excerpt from Litvinoff’s treatise).

b) Who May/Must Receive Performance3) Extent of Performance

Can the obligor force the obligee to accept less that full performance?a) General Rule

What's the general rule? See CC art. 1861, ¶ 1.b) Exception

OGH 153. Olide negligently kills Pascal's pet nutria, Mr. Nutty. Pascal estimates Mr. Nutty's worthat $1,000; Olide puts it at $100. If Olide’s willing to pay $100, must Pascal take it? Or, If Pascal's willingto take $100, must Olide pay it? Explain. See CC art. 1861, ¶ 2.

What's the effect of the rendition and receipt of partial performance? See CC art. 1861, ¶ 3.4) Complications of Performance

a) Refusal of Performance: Tender & Depositb) Multiple Performances: Imputation of Payment

It sometimes happens that the obligor owes the obligee more than one obligation and the performancesthat are the objects of these obligations are of the same genre (e.g., multiple monetary payments or multipledeliveries of Muscadine wine). When the obligor renders one of the performances, to which obligationshould the performance be attributed? See CC arts. 1864-1868.

b. Impossibility of PerformanceIs impossibility of performance really a cause of “extinction” of obligations? Or is its effect something

else? See CC art. 1873, ¶ 1; Levasseur, Précis, 192.1) Definitions

What does "impossibility of performance" mean?OGH 154. Olide, after purchasing a vast tract of land covered with elm trees, opens a "cooperage"

business, i.e., one that manufactures and sells barrel hoops. Olide, like many other coopers in the area, makeshis hoops from his own elm trees. Months later, after Olide's business is well-established, Pascal places anorder for 100 hoops, an average-sized order. But then the area is beset by unusually heavy rains for monthson end, as a result of which Olide and his crews can't get to the elm trees. Olide, unable to get the rawmaterials, shuts down the factory, leaving Pascal's order unfilled. Pascal sues Olide. Is Olide'snonperformance excused on grounds of impossibility? Why or why not? See Trahan, Supp, 88-90 (excerptfrom Saúl Litvinoff, Louisiana Civil Law Treatise).

2) Rulesa) General Rule

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Impossibility of performance has the effect of extinguishing the obligation only if the impossibility hasa specified cause. What is it? See CC art. 1873, ¶ 1; Levasseur, Précis, 192-95.

What's a fortuitous event? See CC art. 1875. Can you think of any examples?b) Exceptions

Does impossibility of performance due to a fortuitous event always extinguish the obligation? SeeLevasseur, Précis, 195-98.

1] Assumption of Risk of ImpossibilityOGH 155. Pascal leases the "back forty" of Belle Terre to Jean Sot for farming cotton. The lease

contract contains the following stipulations: (i) rent shall consist of 1/4 of the crop; (ii) the rent shall bepayable on September 1; (iii) "Lessee shall run the risk of all the chances of all foreseen and unforeseenaccidents, incidents, occurrences, events, phenomena, etc." Sometime later, after Jean Sot has harvested hiscrops, but before he is required to pay his rent, the skies open, producing the first deluge in the area in fiftyyears. As a result of the rain, the storehouse in which Jean Sot had stored the crops floods, causing the cropsto be destroyed. Jean Sot, claiming that this "fortuitous event" dissolved the contract, refuses to pay his rent.Pascal then sues Jean Sot for damages (the monetary value of his 1/4 share of the lost crop). What resultwould you predict? Why? See CC art. 1873, ¶ 2; see also CC art. 2743, ¶ 3.

2] Impossibility After DefaultOGH 156-". The same OGH 154, except as follows. The lease contains no "assumption of the risk"

clause. Before the deluge comes, the cotton is harvested and the cotton bolls are stored in Jean Sot'sstorehouse on Belle Terre. September 1, the date on which delivery of the "rent" is due, comes and goes.Pascal even demands delivery. But still there’s no action from Jean Sot. Then comes the rain, the flood, andthe destruction of the crop. What result now? Why? See CC art. 1873, ¶ 3, & 1874.

3] Impossibility Due to FaultOGH 156-$. The same as OGH 154, except as follows. Before September 1, the date on which

delivery of the rent is due, the cotton is harvested and the bolls are stored in Jean Sot's storehouse. Jean Sot,departing from customary practice among cotton farmers, then plows under the remains of the cotton plantsand levels out the field, transforming it into a vast stretch of uncovered, dust-blown land. When the rainsbegin to fall a few days later, the waters, not surprisingly, run straight off the field and down into the bayou,where they quickly back up into the storehouse and destroy the cotton. It is later established that, had JeanSot not cleared the field and, in so doing, reduced its potential for absorbing rainwater runoff, the storehousewould not have been flooded. What result now? Why? See CC art. 1873.

c. Novation1) Definition

What's a "novation"? See CC art. 1879; Levasseur, Précis, 198-99; Trahan, Supp, 90-91.OGH 157. Pascal loans Olide $500, repayable in monthly installments of $100. Before he even makes

the first payment, Olide falls on hard financial times and, finding himself unable to come up with the first$100, petitions Pascal for relief. In response, Pascal offers him the following deal: "I'll cancel your debt of$500 in return for your promising to give me 100 bottles of your best Muscadine wine. You can deliver themto me in 10 monthly installments of 10 each." Olide accepts. Has there been a novation here? Why or whynot?

OGH 158. Pascal loans Olide $500, repayable in monthly installments of $100. Before he makes thefirst payment, Olide decides to sell his stud bull, Grand Homme, to Jean Sot for $500 payable immediately.Before the sale is passed, it occurs to Olide that he might be able to kill two birds with one stone. He callsPascal and Jean Sot with the following proposal: "Jean Sot, instead of paying me, you pay Pascal on thesame terms and according to the same schedule as I must now pay him. In return, Pascal, you release mefrom my debt to you." Has there been a novation here? Why or why not?

2) PrerequisitesRead Levasseur, Précis, 199-202.

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a) Existence of an Obligation1] Null Obligation

OGH 159. At a high stakes poker game at the Governor's Mansion, Jean Sot, his cash exhausted, betshis pet chaouis, Roxanne, on his last hand. He loses to Olide. After the game is over, Jean Sot, who's nowcome to his senses, decides he can't bear to part with Roxanne and, so, makes Olide the following offer:"Cancel my duty to give you Roxanne and I'll execute a promissory note in your favor equal to her fairmarket value--$50--plus ten percent." Olide agrees. Jean Sot then signs the note. When Olide demandspayment, Jean Sot refuses, saying that "gambling debts are illegal." “That may be so,” Olide replies, “butthis isn't a gambling debt. The gambling debt required you to give me Roxanne. But we novated that debt,replacing it with a simple debt to pay money.” Who wins? Why? See CC art. 1883, ¶ 2; 2031, ¶ 1.

OGH 160. Olide offers to sell his accordion, which he represents was once owned by Clifton Chenierhimself, to Jean Sot for $500. Jean Sot, a big Clifton Chenier fan, snaps up the offer. But then Jean Sot,after falling on hard financial times, threatens not to pay. Olide, not willing to see the deal crater, offers JeanSot a way out: "I'll forget the $500 debt if you'll give me your stud bull, Grande Homme." "It's a deal," JeanSot replies. Sometime later, before Jean Sot delivers the bull, he discovers that Olide lied about theaccordion. When Olide demands delivery of the bull, Jean Sot refuses, arguing that Olide had defrauded him.Olide says, "Not so fast. Though your original obligation--to pay $500-- may have been vitiated by fraud,we novated that debt with another--to give the bull. Turn it over." What result? Why? See CC art. 1883,¶ 2; 2031, ¶ 1.

2] Conditional ObligationCan an obligation that's subject to a suspensive condition be novated, i.e., replaced by a new binding

obligation? See CC art. 1883, ¶ 1.3] Natural Obligation

What about a natural obligation? Can it be novated? See CC art. 1879 comment (b); Levasseur, Précis,201-02; Trahan, Supp, 91-94 (“The ‘Novation’ of a Natural Obligation”).

b) Creation of a Valid ObligationOGH 161.1. Clodice loans Olide $1000, repayable in six months. When it becomes clear to him that

he won't be able to pay the money, he approaches Clodice with an offer: "Cancel my debt and I'll be yourboy toy for a month." Clodice, who's always had a thing for Olide, agrees. Before Olide is to perform, thelocal sheriff learns of the deal and arrests Olide for prostitution. While Olide's sitting in jail, the six monthterm on the original loan comes and goes. Clodice then sends him a letter informing him that he's in defaulton the loan. He fires a letter back at her, saying that, by virtue of their agreement, his original debt had beenextinguished and replaced with another. Who’s right? Why?

OGH 161.2 The same as OGH 161.1, except that the replacement obligation was merely relatively null,as would have been true, e.g., if Olide had been drunk when he incurred it or had been induced to incur itby error. What result now? Why?

c) Difference Between Obligationsd) Intent to Novate

1] Substantive RequirementFrom the mere fact that the parties to an obligation have created a new obligation with structural

elements different from the original, can one infer that the parties intended a novation? Why or why not?OGH 162. Pascal loans Olide $1000, repayable in six months. Before the deadline arrives, it becomes

clear to both parties that Olide may have trouble paying off the loan on time. And so Pascal demands thatOlide put up some security, as is Pascal's right. Olide then delivers his bull, Grand Homme, to Pascal. Dowe have a novation here? Why or why not?

OGH 163. The same as before, except that this time Pascal requests that Jean Sot, Olide's friend, agreeto "pick up" Olide's debt, that is, bind himself to pay that debt. Jean Sot consents. Do we have a novationhere? Why or why not?

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2] Procedural RequirementWho bears the burden of proof with respect to whether a novation has occurred? See CC art. 1880, s.

2. Need intent to novate be expressed in any particular form? See CC art. 1880, s. 1.Read & brief Polk Chevrolet, Inc. v. Vicaro, 162 So. 2d 761 (La. App. 1st Cir. 1964) [Levasseur, Text,

567-71]. Would the result have been any different if the new note had not said anything about its effect onthe original obligation? Does the fact that the parties modified the original repayment schedule of a debt topay money, without more, provide sufficient evidence of animus novandi?

3) TypesNovations, according to the Civil Code, come in two varieties. What are they? Is the list complete?

Accurate?a) Objective Novation

What's an objective novation, properly so called? See CC art. 1881 & cmt. (c); Levasseur, Précis, 203-04.

1] General Rulesa] Not a Mere Modification

Read CC art. 1881, ¶ 3.Recall Polk. Did the original obligors, or at least one of them, execute a new writing in that case? Did

that fact seem to impress the court? Should it have? No. Why not? See CC art. 1881, ¶ 3.OGH 164. Olide, upon borrowing $1000 from Pascal, executes a promissory note to Pascal for $1000

plus 5% interest, which is due and payable on March 1, 1997. The note is secured by a pledge of Olide's studbull, Grande Homme. Just short of five years later, the date on which prescription will run, Pascal finallydemands payment. In response, Olide claims that though he can't pay the note now, he will be able to do soin six months. And so Pascal makes him this offer: "You execute a new note in may favor, in the sameamount and on the same terms, due on September 1, 2002, and I won't sue your hide right now." Olideagrees. After the new note is executed, Olide sends Pascal a letter demanding that he, Pascal, return GrandeHomme to him. His theory? That the execution of the new note effected a novation, i.e., replaced theoriginal debt with a new one, and, in so doing, extinguished not only the original principal debt, but also allof its accessories, including the pledge. Pascal refuses to return the bull, claiming that the execution of thenew note did not alter the original debt in the least. What result? Why?

OGH 165. Pascal loans Olide $1000, repayable in six months. The note is secured by a pledge ofOlide's stud bull, Grande Homme. Before the deadline arrives, it becomes clear to both parties that Olidemay have trouble paying off the loan on time. And so Pascal demands that Olide put up some additionalsecurity, as is Pascal's right. In response, Olide offers to execute a UCC security interest in his tractor infavor of Pascal. Pascal accepts. A short while later, Olide sends Pascal a letter demanding that he, Pascal,return Grande Homme to him. His theory? That the addition of the new security effected a novation, i.e.,replaced the original debt with a new one, and, in so doing, extinguished not only the original principal debt,but also all of its accessories, including the original security, i.e., the pledge. Pascal refuses to return the bull,claiming that the addition of the new security did not alter the original debt in the least. Who wins? Why?See CC art. 1881, ¶ 3.

OGH 166. Pascal loans Olide $1000, which Olide is to repay to Pascal, in person and at Pascal's home,in six months. The note is secured by a pledge of Olide's stud bull, Grande Homme. Long before thedeadline arrives, Pascal, who's since decided to take an extended vacation to southern France, calls Olide anddirects him to pay Pascal's agent, Jean Sot, at Jean Sot's home. At about the same time, Olide falls on hardfinancial times. Through Jean Sot, Olide notifies Pascal of the situation and ask him for "additional time"within which to make the repayment. Pascal consents, notifying Olide that he may take an additional threemonths to pay Jean Sot. A short while later, Olide sends Pascal a letter demanding that he, Pascal or, rather,his agent, Jean Sot, return Grande Homme to him. His theory? That the change in the place of performanceand/or the time of performance effected a novation, i.e., replaced the original debt with a new one, and, in

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so doing, extinguished not only the original principal debt, but also all of its accessories, including thesecurity, i.e., the pledge. Pascal refuses to direct Jean Sot to return the bull, claiming that the changes inquestion did not alter the original debt in the least. Who's right? Why? See CC art. 1881 cmt. (i).

b] Not the Performance of a Substantial Part of the OriginalPerformance

Read CC art. 1881, ¶ 1.OGH 167. Pascal leases the back forty of Belle Terre to Jean Sot for farming. The rent is $1000; the

term, one year. The harvest, however, falls short of everyone's expectations. And so Pascal, to help his oldfriend out, agrees to cut the rent to $800. Has there been a novation? Why or why not? See CC art. 1881,¶ 1, sent. 2, & cmt. (g), ¶ 3.

OGH 168. Pascal loans Olide $1000, which Olide is to repay in full plus 10% interest, in 6 months.During that period Olide, having fallen on hard financial times, petitions Pascal for relief. In response,Pascal agrees to lower the interest rate to 5%. Has there been a novation? Why or why not? See CC art.1881, ¶ 1, sent. 2.

2] ExceptionRead CC art. 1881, ¶ 2.OGH 169. Recall the hypothetical (OGH 164) in which Pascal and Olide, after entering into a loan

agreement, "renewed" the original promissory note on the eve of prescription. Suppose that, when Olideasked Pascal for additional time, Pascal had said, "If you execute a new note, then I'll cancel the original debtand release you from it." Suppose further that when Olide executed the new note, Pascal produced the oldnote, marked "Cancelled" on the back, and returned the old note to Olide. What result now (i.e., has therebeen a novation)? Why or why not?

OGH 170. Recall the hypothetical (OGH 167) in which Pascal and Jean Sot, after entering into a leaseagreement, reduced the amount of the rent from $1000 to $800. Suppose that, when Jean Sot asked Pascalfor some relief from the rent, Pascal had said, "OK. Let's cancel the original contract and execute a brandnew lease, this one with a rent of $800." What result now (i.e., has there been a novation)? Why or why not?

b) Causal NovationOGH 171. Pascal sells Olide 10 nutria pelts at $35/each, payable upon delivery. Pascal delivers the

nutria pelts and then awaits payment. Nothing happens. When Pascal asks Olide what's up, Olide explainsthat he's having trouble coming up with the money. Pascal responds as follows: "That's OK. I'm preparedto loan you the money necessary to pay the debt. But I'll expect repayment in regular installments withinterest 1% above prime." Sometime later, Olide defaults on a debt to Clodice, who then sues Olide, getsa judgment against him, and causes the nutria pelts to be seized for sale at public auction. Pascal intervenesin the proceedings, claiming to have a vendor's lien--a security interest--on the nutria pelts. In reply, Clodiceargues that Pascal's "deal" with Olide had novated Olide's original debt to Pascal, destroying not only theoriginal principal debt, but also all of its accessories, including the vendor's lien. What result? Why? SeeCC art. 1881, ¶ 1, & cmt. (c), sents. 6-7.

c) Modal NovationDoes the introduction or suppression of a condition effect a novation? See CC art. 1881 cmt. (e);

Levasseur, Précis, 207-08.d) Subjective Novation

Read Levasseur, Précis, 205-07.1] Definition

What's a subjective novation? See CC art. 1882; art. 1881 cmt. (c), ¶ 1; art.1882, cmts. (b) & (d); art.1879.

2] Modes of Effecting Subjective Novationa] With Participation of the Obligor

OGH 172. Pascal loans Olide $500, repayable in monthly installments of $100. Before he makes the

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first payment, Olide decides to sell his stud bull, Grand Homme, to Jean Sot for $500 payable immediately.Before the sale is passed, it occurs to Olide that he might be able to kill two birds with one stone. He callsPascal and Jean Sot with the following proposal: "Jean Sot, instead of paying me, you pay Pascal on thesame terms and according to the same schedule as I must now pay him. In return, Pascal, you release mefrom my debt to you." Both Jean And Pascal agree. Has there been a novation here? If so, whatkind–subjective or objective? Explain.

b] Without Participation of the ObligorOGH 173. Pascal loans Olide $1000, which he is to repay in 6 months. As that deadline draws near,

Olide falls on hard financial times. Pascal, however, is desparate for the money and, therefore, is in noposition to afford Olide an extension. Enter Jean Sot, friend of Olide, who, upon hearing of predicament,decides to help him out. He goes to Pascal and makes him this offer: "Release Olide from the $1000 debtand I'll pay you the $1000 on the same terms and conditions as he was required to do." Just then Olide, who'sdiscovered what Jean Sot's up to, breaks into the room and hollers: "Arrêtez-vous autres! Jean Sot, I can'tlet you do this. I won't accept your charity." Pascal, unmoved, then replies, "I accept." Has there been anovation here? If so, what kind–subjective orobjective? Explain. See CC art. 1882, s. 1, & art. 1855, ¶ 1.

4) EffectsWhat are the effects of a novation? See Levasseur, Précis, 208-10.

a) Extinction of the Old Obligation1] Release of Original Obligor from Original Debt2] Release of Security for Original Debt

a] General RuleOGH 174. Pascal loans Olide $10,000. Olide's debt is secured by (i) a mortgage on his estate, Terre

Puante and (ii) a pledge of Olide's stud bull, Grand Homme. Not only that but Auguste, Olide's nephew, assurety, signs a guaranty agreement in favor of Pascal to assure repayment of the loan. Sometime later, Olide,having fallen on hard financial times, petitions Pascal for relief. In a great spirit of generosity, Pascal offersto release Olide from the original debt if Olide will agree to give him 2000 bottles of his best vin de soco.Olide agrees. Sometime later, Olide defaults on his duty to deliver the wine. Pascal then sues Olide toforeclose on the mortgage on Terre Puante and the pledge on the bull and, further, sues Auguste on theguaranty agreement. Olide and Auguste oppose the suit, arguing that the security for the original debt--themortgage, the pledge, the suretyship--have all been extinguished by novation. What result? Why? See CCart. 1913.

b] Exceptions1} By Agreement

Read CC art. 1884.2} Acquisition of the Security

OGH 175. The same as before (OGH 174), except as follows. When it became clear that Olide wasgoing to default, Olide, instead of going to Pascal for relief, decided on a different plan. He would findsomeone willing to buy his property--including his estate and the bull--, have the buyer "assume" his debtto Pascal, and have Pascal release him, Olide, from the debt. Olide had little difficulty finding a buyer: JeanSot jumped at the deal. And Pascal was all for the deal, even agreeing to let Olide go. Sometime later, JeanSot defaulted on his debt to Pascal. Pascal then sued Olide personally, sued Jean Sot personally, sued JeanSot to foreclose on the mortgage and the bull, and sued Auguste under the guaranty agreement. Olide deniedany liability, arguing that he'd been released through novation. Auguste, too, dened liability, arguing thatthe novation had extinguished his suretyship. Though Jean Sot admitted that he was personally liable, hedenied that Pascal had any right to foreclose on the mortgage or the bull. What result? Why? See CC art.1887.

b) Creation of a New Obligationd. Delegation

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Read Trahan, Supp, 94-97 (excerpt from Litvinoff’s treatise).1) Definition

Read Levasseur, Précis, 210-11.a) By Expositionb) By Illustration

OGH ". Pascal, who is about to set out on an extended vacation in Provençe, France, obtains a $25,000letter of credit from Bayou Bank. Bayou Bank, with Pascal’s knowledge, then contacts Aix-Banque, itscorrespondent bank in Provençe, and directs it to “honor” the letter of credit, which it agrees to do (in otherwords, Aix-Banque “confirms” the credit). But when Pascal shows up in Provençe, Aix-Banque refuses togive him even a franc. Pascal then flies home, storms into Bayou Bank, and demands $25,000 “plusdamages.” Bayou Bank, however, refuses to give him anything, The “confirmation” of the credit by Aix-Banque, Bayou Bank argues, extinguished Bayou Bank’s obligation toward Pascal. Who is right? Why?See La. Rev. Stat. 10:5-107(2) Uniform Commercial Code Comment 2 (“The most important aspect of thisrule is that a beneficiary who has received a confirmed credit has the independent engagements of both theissuer and the confirming bank.”)

c) By Contrast1] Versus Subjective Novation

How’s delegation different from subjective novation? Read CC art. 1886, ¶ 2.2] Versus Assumption Between Obligor and Third Person

How's delegation different from an assumption between the original obligor and a third person?2) Effects

Read Levasseur, Précis, 211-13.1) Original Obligation Not Extinguished2) Limitation of Delegate's Defenses

e. RemissionRead CC art. 1888.

1) DefinitionWhat's a remission? See Levasseur, Précis, 213-14; CC art. 1888 cmt. (d).

2) PrerequisitesRead Levasseur, Précis, 214-15.

a) Valid ContractWhich set of “capacity rules” applies to a contrat of remission–the “general” rules for contracts found

in CC art. 1918 et seq. or the “special” rules for donations found in CC arts. 1470-1477? Why?Who, exactly, must “consent” to a remission? Can the obligee/remitter accomplish it on his own? Why

or why not? See CC art. 1890.b) Form

Must a remission, to be valid, be in any particular form? See CC art. 1888, s. 2.OGH 176. Olide owes Pascal $1000. Pascal, who's just learned that Olide's farm was wiped out in a

flood and has just returned from a mass in which the subject of the sermon was "love for one's neighbor,"makes out a document entitled "Receipt," which reads as follows: "Debt for $1000. Paid in full. Pascal."Pascal then sends the receipt to Olide. A short while later Pascal dies, survived by Ti-Boy. Ti-Boy, whoevidently didn't attend the same mass, demands payment of the debt. Olide defends on ground of remission.What result? Why? See CC art. 1889 cmt. (b).

3) Procedural IncidentsRead Levasseur, Précis, 216-17.OGH 177. Pascal loans $1000 to Jean Sot, his foreman and general business manager. The debt is

represented by a promissory note executed by Jean Sot in Pascal's favor. Before the debt is repaid, Pascaldecides to take an extended vacation abroad. In anticipation of the trip, Pascal turns all of business papers,

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including the note, over to Jean Sot for safekeeping. When Pascal returns from his vacation, he retakes hispapers and, in due course, demands payment of the note from Jean Sot. Jean Sot refuses to pay, arguing thatPascal had tacitly remitted the debt. What result? Why? Be sure to consider who bears the burden of proof.See CC art. 1889.

4) EffectsWhat are the effects of a remission? Read Levasseur, Précis, 217-20.

a) Remission of Principal DebtSuppose there's a principal debt backed up by security, whether real (e.g., mortgage, pledge) or personal

(suretyship) or both. What effect does remission of the principal debt have upon these accessory debts? SeeCC art. 1892, ¶ 1.

b) Remission of Accessory DebtDo these principles work in reverse? Suppose, again, a principal debt that is backed up by personal

and/or real security. This time, though, the obligee releases the security rather than the principal debt. Isthe principal debt affected? See CC art. 1892, ¶ 2, & 1891.

c) Remission of Fewer Than All the SuretiesRead CC 1892, ¶ 3.

f. Compensation1) Definition

What is compensation? Read Levasseur, Précis, 220-21.2) Types of Compensation

a) Legal CompensationRead Levasseur, Précis, 221-25.

1] DefinitionRead CC art. 1893, ¶ 1.

2] PrerequisitesRead CC art. 1893.

a] Reciprocity of ObligationsOGH 178. Olide and Jean Sot form a partnership between them, which they call "OJ's." OJ's borrows

$10,000 from Pascal, repayable on demand. Sometime later Pascal, behind the wheel of his combine,negligently runs over Jean Sot. Jean Sot's damages are estimated at $5,000. Does compensation take placehere? In particular, do OJ's debt to Pascal and Pascal's debt to Jean Sot, one of the two partners of OJ's,cancel each other out? Why or why not? See CC art. 2801, ¶1.

b] Interchangability of ObjectsOGH $. Suppose that Pascal owes Olide money and Olide owes Pascal a certain quantity of generic

Muscadines, the value of which is readily fixable. One owes money to the other; the other owes fungiblegoods to the first. Can compensation take place? Why or why not?

What does "fungible" mean? See J.-R. Trahan, The Classification of Things: A Précis, pt. IV, in Trahan,Supplement to Yiannopoulos’ Civil Law Property Coursebook 15-16 (3d ed. 2001) (“Two or more thingsare fungible vis-à-vis each other if they belong to the same genre of things and if, by virtue of their physicalcharacteristics or the intention of those who deal with them, they are interchangeable or substitutable onefor the other in view of the end for which they will be used. In commercial transactions, they are ordinarilybought and sold or otherwise traded by numbers, weight, or measure.”)

OGH 179.1. Pascal is supposed to deliver to Olide "10 bottles of red Muscadine wine." Olide issupposed to deliver to Pascal "10 bottles of white Muscadine wine." Can compensation take place? Whyor why not?

OGH 179.2. Pascal is supposed to deliver to Olide "10 bottles of red Muscadine wine vintage 1994."Olide is supposed to deliver to Pascal "10 bottles of red Muscadine wine vintage 1995." Can compensationtake place? Why or why not?

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c] LiquidityWhat does “liquidated” that mean? See Levasseur, Précis, 224.OGH 180. Symeonides runs over Trahan in the parking lot, causing Trahan to sustain personal injuries.

Trahan estimates his damages at $500,000. Symeonides, however, refuses to pay anything. Why? First, hedenies any liability. On what basis? Act of God: the real cause of the accident, he claims, was a sudden gustof wind, one sufficiently strong to cause his car to veer off course and over Trahan. Second, he denies thatTrahan suffered $500,000 worth of damages. Given the meagre value of Trahan's life and his equally meagreearning capacity, Symeonides estimates Trahan's damages at $100. Is Symeonides' "debt" to Trahan"liquidated"? Why or why not?

d] ExigibilityWhat does it mean for an obligation to be “presently due”? See Levasseur, Précis, 224-25.

1} Unexigible Debtsa} Suspensive Term

Recall Hibernia Bank v. D.H. Holmes. What was the obstacle to legal compensation in that case?b} Suspensive Conditionc} Natural Obligation

What about a natural obligation? Is it "presently due"? Why or why not? See CC art. 1761.2} Exigible Debts

What if the obligee or a court grants the obligor a "grace period" within which to render performance,i.e., additional time after the date on which performance was originally due? Does that render the debt notpresently due? See CC art. 1893, ¶ 3.

NOTE: The Civil Code, in addition to spelling out the prerequisites for compensation, identifiescertain non-prerequites for compensation, namely, (i) identity of the sources of the debts and (ii)identity of the places of performance of the debts. Thus, compensation can occur even thoughone debt arise from tort and another from contract, CC art. 1894, ¶ 1, and even though one is tobe performed in Gueydan and the other in Breaux Bridge, CC art. 1895.

3] ExceptionsIt can happen that though two persons reciprocally owe each other liquid, presently due debts for money

or fungible goods of the same kind, legal compensation nevertheless doesn't take place. Read Levasseur,Précis, 225-27.

a] Duty to Return a Thing of Which the Owner Has Been UnjustlyDispossessed

OGH 181. Jean Sot owes Olide $1000, payable on demand. Olide, however, has been having troublegetting Jean Sot to pay up. And so, late one night, under cover of darkness, Olide sneaks into Jean Sot'shouse and steals $1000 from Jean Sot's strong box. When Jean Sot discovers what's happened and demandhis money back, Olide refuses, claiming compensation. Compensation of what? Compensation between JeanSot's debt to repay the loan and Olide's debt to restore what he's stolen. Is Olide right? Why or why not? SeeCC art. 1894, ¶ 2.

b] Duty to Return a Deposited or Loaned ThingOGH 182. H. Wainer & Co., a depositor at Canal Bank & Trust Co., borrows $20,000 from the bank.

The debt is represented by a promissory note in the same amount. In the course of time, the company beginshaving touble making its loan payments on time. And so the bank, on its own initiative, "sets off" thecompany's deposits against the outstanding indebtedness, that is, reduces the debt by the amount of thedeposits. Its theory? That compensation occurred between its duty to refund the deposit and the company'sduty to repay the loan. Is the bank right? Why or why not? See CC art. 1894, ¶ 2.

c] Duty to Give a Thing Exempt from SeizureOGH 183. Jean Sot owes Olide $10,000, a sum so large he can't repay it. To prevent Olide from

hauling him into court, Jean Sot agrees to assign "50% of my weekly wages to you, which I'll continue to pay

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until the debt is retired." Sometime later, Olide, behind the wheel of his combine, negligently runs over JeanSot, causing Jean Sot to sustain $10,000 in personal injuries. Olide refuses to pay Jean Sot anything for thetort, claiming compensation. Is Olide right? Why or why not? See CC art. 1894, ¶ 2, & La. Rev. Stat.13:3881.A(1) ("The following income or property of a debtor is exempt from seizure . . . [s]eventy-fivepercent of his disposable earnings for any week . . . .")

4] EffectsWhat are the effects--the juridical consequences--of legal compensation? Read Levasseur, Précis, 227-

30; then read Trahan, Supp, 97-99 (the real meaning of 1893, ¶ 1).a] General Effects

Read CC art. 1893, ¶ 2.OGH 184. Pascal loans Olide $10,000. The debt is secured by (i) a mortgage on Olide's estate in favor

of Pascal, (ii) a pledge of Olide's stud bull, Grand Homme, to Pascal, and (iii) a suretyship agreementexecuted by Olide's nephew, Auguste, in favor of Pascal. Sometime later, Pascal, behind the wheel of hiscombine, runs over Olide, causing him to sustain personal injuries. At trial Olide's damages are fixed at$10,000. Would Olide's debt to him and his debt to Olide cancel each other out via compensation? Why orwhy not? See CC art. 1897, ¶ 1: "Compensation between obligee and principal obligor extinguishes theobligation of a surety."

Does this principle work in reverse?OGH 185. Suppose that Pascal had run over not Olide, the principal obligor, but Auguste, the surety.

Would compensation have taken place between Pascal's tort debt to Auguste and Auguste's surety debt toPascal? Why or why not? See CC art. 1897, ¶ 2; then read Trahan, Supp, 99-101.

b] Special Effects1} Where There's Solidarity

a} Passive SolidarityRead CC art. 1898; then read Trahan, Supp, 101-07 (legal compensation & solidarity). Is the apparent

“plain meaning” of article 1898 the “true” meaning?OGH 186. Pascal loans $12,000 to Olide, Clodice, and Jean Sot collectively. The loan agreement

expressly provides that the borrowers shall be "solidarily bound" for the debt. Sometime later Pascal, behindthe wheel of his tractor, runs over Jean Sot, causing him to sustain personal injuries. At a trial, it'sdetermined that Jean Sot's damages come to $4,000. Does legal compensation occur between the borrowers'debt to Pascal and Pascal's debt to Jean Sot? Why or why not?

OGH 187. The same as before (OGH 186), except that, this time, Jean Sot's damages are determinedto be $1,000. To what extent is the borrowers' solidary obligation extinguished? Is it Jean Sot's virile share,i.e., $4,000? Or is it something else? Explain.

OGH 188. The same as before (OGH 186), except that, this time, Jean Sot's damages are determinedto be $12,000. That, you'll recall, is the same amount as the amount of the loan. To what extent is theborrowers' solidary obligation extinguished? Is it Jean Sot's virile share, i.e., $4,000? Or is it somethingelse? Explain.

b} Active Solidarity2} Where Third Parties Have Acquired Rights

a} In General1/ Compensation Barred

OGH 189. Pascal loans Olide $10,000. The indebtedness is represented by a negotiable demand notein the same amount. Before the debt is paid off, Pascal indorses the note over to Clodice for $9,500. Stilllater, but before the note is paid off, Pascal, behind the wheel of his combine, runs over Olide, causing himto sustain personal injuries. At trial it's determined that those injuries amount to $10,000. Still later, Clodicepresents the note to Olide, from whom she demands payment. Olide refuses to pay, claiming that his debtto Pascal--the debt represented by the note--was extinguished by compensation. What result? Why? See

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CC art. 1899.OGH 190. Pascal loans Olide $10,000. Olide then goes bankrupt. Still later, Pascal, behind the wheel

of his combine, runs down Olide, who sustains personal injuries. The creditors' committee appointed by thebankruptcy court to administer Olide's estate then brings suit against Pascal to recover damages for Olide'spersonal injuries. The jury fixes the damages at $10,000. Pascal, however, refuses to pay, claimingcompensation. The creditors say, "Miche en flûte!" (Trans: crap!) Who's right? Why? See CC art. 1899.

2/ Renunciation of Compensation BarredOGH 191. Pascal loans Olide $10,000. The debt is secured by a mortgage on Terre Puante, Olide's

estate. A short time later Olide borrows $5,000 from Clodice, for which he grants her a second mortgageon Terre Puante. Still later Pascal, behind the wheel of his combine, runs over Olide, causing him to sustainpersonal injuries. At trial Olide's damages are fixed at $10,000. Though Pascal could claim compensation,he decides not to do so and, so, pays Olide $10,000. After that Olide defaults on his loan from Clodice,prompting her to foreclose on her mortgage on Terre Puante. Pascal then intervenes in the proceedings,claiming that he's got a first mortgage on Terre Puante. In response Clodice claims that Olide's debt to Pascaland, with it, Pascal's mortgage on Terre Puante were extinguished through compensation. What result?Why? See CC art. 1899.

b} AssignmentSkipped.

b) Conventional CompensationRead CC art. 1901; Levasseur, Précis, 231.

c) Judicial CompensationRead CC art. 1902; Levasseur, Précis, 231-32.

------------ Now, to review the principles governing compensation, you should read Trahan, Supp, 108-15. You

may conduct this review at your leisure, so long as you finish it before the exam.------------